NEW YORK – J.M. Smucker Co. (SJM) Monday reported a surprise 9 percent quarterly decline in profit because of increased marketing costs and expenses for restricted stock compensation, and its shares fell sharply.
The maker of Jif peanut butter (search) and Smucker's jams reported a profit of $29.9 million, or 51 cents a share, in the fiscal first quarter ended July 31. That compares with $32.8 million, or 60 cents a share, a year earlier.
Excluding $4.5 million in costs related to the company's acquisition of International Multifoods (search) and other restructuring expenses, earnings per share were 56 cents. Last year's profit included a $5.4 million gain from the sale of the company's Henry Jones Foods (search) business.
Analysts, on average, were expecting earnings per share of 63 cents, according to Reuters Estimates.
"It definitely was a weak quarter," said Longbow Research analyst Alton Stump. "Our trade contacts were saying that the company was having a tough time in the baking mix category." Products in that business include Pillsbury desserts and Hungry Jack pancakes.
Stump has a "neutral" rating on J.M. Smucker's shares.
J.M. Smucker's marketing costs rose 15 percent during the quarter. The company said it took $2.4 million in charges related to its new restricted stock compensation program.
Company executives said on a conference call with analysts that Wall Street forecasts did not factor in the costs from the stock plan or $1.2 million in depreciation from software the company no longer uses.
Sales rose to $510.3 million from $413.3 million. The Multifoods acquisition added $154.3 million to total sales.
J.M. Smucker said it expected revenue of about $2.16 billion for the full fiscal year, slightly below analysts' average estimate of $2.19 billion. The company said it expected earnings per share growth for the fiscal year to reach its long-term goal of 8 percent.
Shares of J.M. Smucker fell $3.02 to $45 on Monday. The stock was the biggest loser in percentage terms on the NYSE.